LATIN AMERICA: Eliminating Poverty at Low Cost

RIO DE JANEIRO, Apr 26 2008 (IPS) - The success of pioneering efforts to reduce inequality and poverty using relatively few resources has led to an expansion in Latin America of direct aid, targeting the most vulnerable families, especially in rural areas.

Known as "conditional cash transfer", it encompasses many different strategies in more than a dozen Latin American countries. Brazil and Mexico have truly massive programmes, reaching 11.1 million and five million impoverished families, respectively, while Colombia&#39s programme involves just 1,500 families.

The "Chile Solidario" initiative, often included in the same category, "is not comparable to other programmes in terms of amounts or objectives," like Brazil&#39s "Family-Grant" and Mexico&#39s "Opportunities" programmes, said Verónica Silva, executive secretary of Chile&#39s Social Protection System.

The Chilean programme, created in 2002, now covers 290,000 families, about 40 percent of whom live in rural areas. "The proportion of participants is much higher in rural zones (the Chilean population is around 88 percent urban), because if you want to find the poorest of the poor in Chile, you have to look for an indigenous mother who is the head of a household in a rural area," Silva told Tierramérica.

The focus is on extreme poverty, which affected 5.6 percent of the Chilean population in 2000, a sector so marginalised that it falls outside the social welfare networks. The aim is to bring these families into the fold with psycho-social support and a monthly stipend, which gradually declines from 28 to eight dollars over two years.

The reduction in poverty and indigence was 20 percent for rural homes benefiting from the system, according to the latest report by the World Bank, which provides technical assistance to Chile Solidario. Official data indicate that in 2006, "for the first time, poverty rates in rural areas were below that of urban areas (12.3 and 14 percent, respectively)."

The World Bank estimates that Chile Solidario is responsible for 18 percent of the reduction of indigence and 35 percent of the decline in poverty.

Brazil&#39s Family-Grant, created in 2003 by joining together several social programmes launched in the 1990s, achieved its goal of providing aid to 11.1 million families in 2006. It offers between 10.5 and 100 dollars a month to each family group, conditional on children&#39s school attendance, vaccination, visits to the doctor, and adequate nutrition.

The programme achieved a 21 percent reduction in the gap between rich and poor between 1995 and 2004 – an outcome identical to Mexico&#39s Opportunities initiative, according to the International Poverty Centre of the United Nations Development Programme.

From 1993 to 2006, the proportion of Brazilians living below the poverty line fell from 35.3 percent to 22 percent of the population. Family-Grant and the Continued Benefit programme, a stipend for the elderly and infirm, played "a fundamental role" in that achievement, Marcelo Neri, social policy expert with the Getulio Vargas Foundation, told Tierramérica.

In 2006 alone, 5.8 million people escaped poverty, as defined by the official poverty rate, in this country of 188 million.

Poverty in rural areas fell from 63.7 to 40.9 percent between 1993 and 2006. Rural retirement pensions, guaranteed by the constitution even for informal sector workers, today offer the minimum monthly salary (245 dollars) to 7.7 million retired farm workers, which helped bring about the reduction.

Brazil’s tax burden amounts to 35 percent of gross domestic product (GDP), similar to that of rich countries, noted Neri. But the Family-Grant provides the best results with proportionally lower costs, of just 0.7 percent GDP, he added.

The Family-Grant benefits children, in contrast to pensioners, and gives a dynamic boost to the local economy, expanding the market for food produced by small farmers, which also reduces rural poverty, Neri said.

Most of the Family-Grant money that goes to families is used to buy food, which promotes family farming and smaller local commerce, said Rosani Cunha, secretary of Citizen Income at the Ministry of Social Development.

Of the families receiving the grant last year, 30.8 percent were rural, a proportion much higher than the 18 percent of Brazil&#39s total rural population, due to the higher rate of poverty in the countryside.

The statistics show higher school attendance rates, especially in the north and northeast, the country&#39s poorest regions, reducing the risk of poverty of future generations and giving the lie to "the laziness effect" that critics had warned of, Cunha told Tierramérica.

In Pombal, an impoverished town in the northeastern state of Paraíba, a woman who used part of the grant to raise chickens and thus was able to get off government support, became an example of initiatives for exiting the programme, she said.

Pombal, with 3,710 families receiving the grant out of a population of 33,000, has seen several hundred families leave the programme. The city government is preparing a poultry farming initiative involving a pilot group of 25 families.

The municipal registry, which includes all poor families, is "an important instrument" of integration and reinforcement of other policies, like food security and housing, which generates "synergies", city social worker Cizia Romeu said in a Tierramérica interview.

The Brazilian programme is notable for its decentralisation. The local authorities take on much of the responsibility, given that some of the conditions for receiving the grants, such as school attendance and health, depend on municipal and state governments, explained Cunha.

But it was in Mexico that the first programme of massive conditional cash transfer was launched, in 1997, under the name "Progresa", later replaced by "Oportunidades" (Opportunities), in response to the 1994-1995 economic crisis.

From 2000 to 2006, poverty in Mexico fell from 53.6 to 42.6 percent of the population, and infant mortality dropped 11 percent, thanks largely to the initiative that began with 300,000 families and today helps five million in 96,000 marginalised areas, 86 percent of them in the countryside.

Nevertheless, "it doesn&#39t seem to have prevented emigration, and we don&#39t see a direct impact on the rural area’s economic problems," which are the result of other factors, like credit, irrigation and land quality, but it has "helped many families to remain on their land," according to Santiago Fernández, a consultant who evaluates social programmes.

"The young people end up migrating," due to poverty and the attraction of cities and the United States, even though Opportunities "has provided improvement in the situation of many families, and the statistics show it," he said in a conversation with Tierramérica.

In Colombia, the "Families in Action" programme, launched in 2001, has a limited impact, reaching just 1,500 families, with subsidies for food and education of 8.5 to 27 dollars a month, distributed almost exclusively to mothers.

But the programme responds to a unique facet of Colombian reality: the population displaced from rural areas by the decades-long armed conflict. "The benefit was great, as if it fell from heaven," said Fernando Parra, displaced in 2001 from the southern department of Huila, with an 11-member family. He is now a community leader in Ciudad Bolívar, a poor suburb of Bogotá that is home to many who have fled the war.

"I like the programme a lot, but they aren&#39t taking registrations now, and many people need it," lamented Rubiela Castro, who lives in Usme, a district in southeastern Bogotá.

(*Additional reporting contributed by Daniela Estrada in Chile, Diego Cevallos in Mexico and Helda Martínez in Bogotá. Originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme and the United Nations Environment Programme.)